Eurozone business downturn 'entrenched' in Germany

Eurozone private sector activity contracted for the 10th time in 11 months in July, with data now consistently showing the downturn becoming "entrenched" in Germany, a key survey showed Friday. The Purchasing Managers Index (PMI) compiled by business research firm Markit was stuck at 46.5 in July according to a final reading, indicating another month of contraction in activity. "The final PMI data for July confirm the message from the earlier flash estimate that the eurozone continued to contract at a quarterly rate of approximately 0.6% in July, suggesting the region looks set for a second consecutive quarterly decline," Markit said. "Some consolation can be gained from the fact that the steep rates of contraction in Italy and Spain are at least showing signs of bottoming out. Ireland also brings hope that the periphery can return to growth," added chief economist Chris Williamson. "The big worry, however, is that the downturn in Germany may be becoming more entrenched," he said. The readings showed manufacturing activity at a three-year low in July with Germany and France posting three-year-high rates of decline in this sector, while across the eurozone, job losses were at the sharpest rate since November 2009. London-based analyst Howard Archer of IHS Global Insight said the results all told "reinforces our belief that the ECB will be trimming interest rates from 0.75% to 0.50% within the next couple of months."